Critical Analysis: Broadcom (BRCM) vs. Cabot Microelectronics (CCMP)

Cabot Microelectronics (NASDAQ: CCMP) and Broadcom (NASDAQ:BRCM) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitabiliy, earnings and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Cabot Microelectronics and Broadcom, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cabot Microelectronics 0 1 1 0 2.50
Broadcom 0 0 1 0 3.00

Cabot Microelectronics currently has a consensus price target of $75.00, indicating a potential downside of 4.31%. Broadcom has a consensus price target of $216.40, indicating a potential upside of 295.83%. Given Broadcom’s stronger consensus rating and higher probable upside, analysts plainly believe Broadcom is more favorable than Cabot Microelectronics.

Dividends

Cabot Microelectronics pays an annual dividend of $0.72 per share and has a dividend yield of 0.9%. Broadcom does not pay a dividend. Cabot Microelectronics pays out 25.4% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares Cabot Microelectronics and Broadcom’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Cabot Microelectronics $473.27 million 4.15 $126.84 million $2.84 27.60
Broadcom N/A N/A N/A N/A N/A

Cabot Microelectronics has higher revenue and earnings than Broadcom.

Profitability

This table compares Cabot Microelectronics and Broadcom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cabot Microelectronics 15.53% 15.81% 10.71%
Broadcom N/A N/A N/A

Insider & Institutional Ownership

94.8% of Cabot Microelectronics shares are held by institutional investors. 5.5% of Cabot Microelectronics shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Cabot Microelectronics beats Broadcom on 7 of the 10 factors compared between the two stocks.

About Cabot Microelectronics

Cabot Microelectronics Corporation supplies polishing slurries and pads used in the manufacture of integrated circuit (IC) devices within the semiconductor industry, in a process called chemical mechanical planarization (CMP). The Company is engaged in the development, manufacture and sale of CMP consumables. The Company develops, produces and sells CMP slurries for polishing conducting and insulating materials used in IC devices, and also for polishing the disk substrates and magnetic heads used in hard disk drives. It also develops, manufactures and sells CMP polishing pads, which are used in conjunction with slurries in the CMP process. The Company also pursues other surface modification applications through its engineered surface finishes (ESF) business. The Company offers CMP polishing pads, under the Epic and NexPlanar brand names, for a range of applications and technology nodes.

About Broadcom

Broadcom Corporation (Broadcom) provides semiconductor solutions for wired and wireless communications. The Company offers a portfolio of system-on-a-chip solutions (SoCs) that deliver voice, video, data and multimedia connectivity in the home, office and mobile environments. The Company’s solutions are used globally by manufacturers and are embedded in an array of communications products. The Company operates in two segments: Broadband and Connectivity, and Infrastructure and Networking. Broadcom’s solutions in Broadband and Connectivity segment include set-top box solutions, broadband modem solutions, connectivity solutions and a range of other technologies. Its solutions in Infrastructure and Networking segment include Ethernet switches and PHYs, which includes switches and fabrics; copper and optical transceivers; backplane and optical front-end physical layer devices; processors, and other Infrastructure and Networking technologies.

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